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Tuesday, June 20, 2017

Regular readers will remember that in March I went to
Washington D.C. for a big flood insurance conference. Recently I signed up for
another in Kalispell, Montana in August, which will be right before the
National Flood Insurance Program (NFIP) is renewed by Congress. The content of
the legislation should be known by then if they keep working at the pace they
are now.

Apparently there is a lot of agreement on both sides as to
what they want the bill to accomplish. Basically they are opening the system up
to private insurance carriers, while still maintaining affordability standards
that are part of the goal of the whole system. As you might expect, it is
difficult to balance affordability with charging the correct rate for coverage.
It’s a goal that really only a government can have, based on the societal goal
of helping people stay in their homes in spite of the fact that sea levels are
rising and the claims on flood insurance are rising each year.

Private insurance carriers have to make a profit. So they
need to charge rates that will allow claims to be paid. That’s the conflict.
But congress is looking at some innovative ways, like tax credits for lower
income people, to help them pay for coverage.

But the news for the consumer is mostly good. The private
flood insurers are able to use much more data than the government, to figure
out the right rates. And frankly, many people are paying too much, based on
current flood ‘zones’ that are very coarse, as opposed to the new data that is
available, which will be able to tell the insurance carriers which homes that
are ‘in a flood zone’ can be written at a lower rate.

Anyway, these conferences are great. They give me a chance
to talk to people in other parts of the catastrophe insurance industry such as
claims adjusters and the actuaries who figure the rates. I also get to hear
interpretations and analyses from people very high on the ladder of such
things. So I come back not only having read the rules, but also with some
information on the intent, and how they will be enforced. Finally, I am able to
develop great contacts at our insurance companies, which enable us to get
quick, definitive answers we might not get by calling ‘customer service’. We
all know from experience with phone, cable, banks, etc. that dealing with first
line customer service can be frustrating. Not that the people don’t want to
help, but often they don’t have the knowledge to answer any but the most basic
questions, and we already know the answer to most of those!